Here are 2 monthly cycles, gold and oil, that are mirror images. Gold is headed lower and oil is due to move higher. Here are 4 graphs: monthly cycles and sentiment graphs that make the point.

As to gold, the initial peak in January was the start of an A wave. The March 2-3 top appears to be the start of a C wave (or a 3) down. The 23.6% retracement level has been passed. The 38.2% retracement level is $4,150, and the 50% retracement is $3,700. Here are the targets:

1.383 = $3,660
1.50 = $3,578
1.618 = $3,496

It appears that the low in this down move will be near $3,600-$3,700.

Sentiment is measured by dividing the leveraged gold ETF by its unleveraged ETF. Note the sentiment ratio has already begun to decline. The extreme bullishness is beginning to wane, but it is a long way from a buy signal.

Gold Monthly Cycle

UGL/GLD Gold Sentiment Ratio Has Hit The Sell Level

Here is the same approach as applied to the oil market.

After the sharp move up, price has not retreated by much. The rally created what appears to be a breakaway gap which usually marks the start of a move. The cycles still point up. It appears that a consolidation is underway, not lower prices. The price range runs from $87-$101.

From February 21 through May 21, price has increased 76.2% of the time for a 5.21% gain. This is true for any year. Because the monthly dynamic is also rising, the odds rise to over 83%.

These bullish readings imply that matters in the Gulf will not go well.

Oil Monthly Cycle

UCO/SCO Oil Sentiment Shows Pessimism

Bill Sarubbi Bio
cyclesresearch.com

Bill Sarubbi obtained his BS in 1971 and his MBA in 1972 from NYU, becoming a member of the Foundation for the Study of Cycles in the same year. He trained as a therapist under the direction of Dr. John Pierrakos in New York for nine years. From 1972 to 1990 he worked on the buy and sell sides of Wall Street as an analyst with the Value Line Investment Survey, as an institutional broker, and as a technical strategist with PaineWebber. From 1990 to 2004 Sarubbi was with the Abu Dhabi Investment Authority, where he was a technology fund manager, North American strategist, and member of the currency hedging committee. Since 2004 he has been operating his own money management and consulting service. In the course of his work, he developed unique market analysis software. Sarubbi is a Forbes contributor and is active in groups that focus on the future and on cycles, including the Kenos Circle, a Vienna-based group of futurists. Sarubbi is based in Vienna.

 

NOTE: Prepared by FSC Board Member Bill Sarubbi. The views expressed are his own and not investment advice. This article is intended exclusively to provide information and education to help individuals better understand cycles and the markets. However, this information is not to be construed as professional advice as to the buying and selling of securities or other investment instruments. In no event does the host express any opinion with respect to, or make recommendations regarding, the purchase or sale of any particular security or other investment instrument. There is a very high degree of risk involved in trading securities, and buying or selling decisions are solely within the personal discretion of each individual.

Soybean Prices - A 1986 Extrapolation
by Gertrude Shirk
Editor of the Cycles magazine and Vice President of the FSC

From the Archives: This article is reposted as it was published in Cycles Volume Thirty Seven - 1986.

The 1985 extrapolation of soybean prices, first published in the January/February 1985 issue of Cycles is reproduced below as Figure 1. The "How It Came Out" section of the actual price line is completed through December 1985. The prices used in this work are the average monthly cash price of No. 1 Yellow soybeans, Illinois Processor.

The yearly average on a calendar year basis of the calculated line for 1985 was $6.07 which compares to the actual calendar year average price of $5.64 that occurred. In early 1985, low level of the extrapolated calculated line was considered by some members interested in soybean prices to be unduly pessimistic. But, as it turned out, the calculated line ran consistently above the actual prices as they developed.

The calculated/actual price chart covers only five years, and a better perspective can be gained from the entire history of soybean prices. Figure 2 shows this history by crop years, beginning with the figure for the crop year 947-48, and continuing through 1984-85.

This chart is a ratio chart, one on which equal distances measure equal percentage changes. It is obvious that since soybeans have moved to a level of 60 cents and more that the percentage changes from year to year have been much greater than during the earlier period.

The end portion of Figure 2, beginning with the figure for 1972-73 is enlarged on Figure 3, and two possible trend lines are added. The level and direction of trend are important considerations because cycles operate around — above and below — the trend. Although it is tempting to consider the straight line trend as the best description of trend, it is also possible to arrive at a different description — as shown by the bowed line. The top straight line trend gives a 1985-6 value of $6.89 compared to about $6.50 for the curved line.

In any event, actual prices through February 1986 have been well below these trend levels for many months, and the yearly average trend that was used to prepare a 1986 calculated line averaged $5.75. By historical standards (the two trends on Figure 3) the value of $5.75 is low, but it is above the last eight month's experience.

The cycles that were combined with trend were the 12-month, the 24.56-month and the 38.6-month. The record of the 24.56-month cycle is shown on Figure 4, and the 38.6-month cycle is recorded on Figure 5. Both charts are marked to show how the cycle has performed since it was first defined.

The 24.56-month cycle has an average amplitude of 10% of trend at the time of an average crest. There was an ideal crest at May 1985, and the model pattern is now on the way down to a trough at May 1986.

The 38.6-month cycle has an average amplitude of 12% of trend at the time of an ideal crest. The ideal cycle is now going up to a crest at October 1986. Since the low on the seasonal cycle occurs at October, it will be interesting to see what is actually occurring to soybean prices come October.

The combination of the assumed trend and the three cycles is shown on Figure 6 as the broken line.

The cycles used here measure as being statistically significant. That is, the numbers are good. But, even more important is the degree to which these cycles have functioned since they were first postulated.

The average seasonal pattern in soybean prices that was used in the combination is as follows:

By Iain MacKay, FSC Board Member

In the January/February 1986 issue of Cycles magazine, Gertrude Shirk reviewed the performance of cycles in soybean prices previously discussed in Cycles 50 years ago, in the February 1976 issue.

The article made some short-term forecasts based on 12-, 38.6-, and 24.56-month cycles. I wanted to see if a calibration of those cycles made in 1986 would have given a helpful forecast for the time ensuing since.

Our data source is FRED, courtesy the Federal Bank of St Louis.

This is their monthly history of the Soybean Producer Price Index since 1947. They use 1982 as the base for the index.

FRED — Producer Price Index by Commodity: Farm Products: Soybeans

Note: This analysis uses the FRED® API but is not endorsed or certified by the Federal Reserve Bank of St. Louis.

In 2026 we can vibe code a model that best fits these three cycles to the period 1947 to February 1986 and see how well they have played out since then.

For convenience I used the price gradient (monthly proportionate difference) rather than the raw price, as it is less influenced by the long-term trend but should show similar cyclicity with price turning points occurring at gradient zeros.

A differential evolution algorithm calibrated the phase and amplitude of the gradients, using data from 1947 to 1986, which allows the cycle forecast gradient to be projected from 1986 to the present day and forward to 2030.

Here are the results of the projection, firstly for the last 50 years. The grey-shaded period shows projected gradient, with projected price highs and lows marked with red and green lines respectively.

Soybean Cycle Analysis: 1976 (Jan) - 2030 (Dec)

Looking more closely at the period 1980-2000:

Soybean Cycle Analysis: 1980 (Jan) - 2000 (Jan)

And the years 2020 to 2030:

Soybean Cycle Analysis: 2020 (Jan) - 2030 (Dec)

It is a matter of debate whether cyclic behaviour in financial time series is endogenous (down to the interaction of opposing forces within the system) or exogenous (driven by some external clock).

The distinction is more than academic, because the equations governing endogenous cycles are very sensitive to tiny changes in their parameters. Systems like these can be fundamentally chaotic and unpredictable. On the other hand, exogenous cycles endure over time, so they can be calibrated given sufficient data and they can be modelled with more tractable mathematics like Fourier analysis. While time-local circumstances can shift timing of individual cycles, in the long run the turning points for exogenous cycles remain close to predicted times.

Analysis like this brings evidence to the debate.

The work of the Foundation has identified many apparent exogenous cycles, the work to consolidate and explain them continues.

Iain MacKay Bio

Iain MacKay is the director and founder of Computable Functions Limited, which offers consulting in the application of advanced software technologies for market and survey research, as well as director and co-owner of X-MR Limited, a market research software development firm. MacKay was Deputy Chairman at Pulse Train Technology (now Confirmit), where he developed the company’s mainstream products for over 20 years. As director of UK development for Arbitron Corporation (now Neilson Audio), MacKay set up the development office in the UK. MacKay is based in the UK.

 

NOTE: Prepared by FSC Board Member Iain MacKay. The views expressed are his own and not investment advice. This article is intended exclusively to provide information and education to help individuals better understand cycles and the markets. However, this information is not to be construed as professional advice as to the buying and selling of securities or other investment instruments. In no event does the host express any opinion with respect to, or make recommendations regarding, the purchase or sale of any particular security or other investment instrument. There is a very high degree of risk involved in trading securities, and buying or selling decisions are solely within the personal discretion of each individual.

By Bill Sarubbi, FSC Board Member

cyclesresearch.com

The U.S. stock market indices are likely headed higher into January. There are four reasons for this projection.

First, this is a year ending in a 5, the strongest year in the 10-year decennial pattern as developed by Edgar Laurence Smith at Ameritrust Bank. All questions in such "5" years are resolved on the upside. September has been the weakest month in any year, but this bearish month has closed on the upside 66% of the time in these "5" years. The weakest part of September has been the second half of the month, especially the last week. This period could present favorable buying opportunities.

DJIA Histogram of Expected Return in Years Ending in 5

Second, the combination of the 1-, 4- and, 10-year cycles is rising. The first cycle is the annual cycle in any year from 1885. The 4-year cycle has been called the election year cycle. Their summation is below.

1, 4, and 10-Year Cycles in 2025

Third, the dynamic cycle depicted below rises into January. This "catch all" approach accumulates the effect on the S&P of the strongest cycles. It detects cycles that may not be represented by the prior cycles.

S&P Monthly Cycle

And fourth, 60% of all S&P gains have been generated in Q4 of any year.

In order to project a price level, the height of the rectangle from which the S&P 500 broke out is projected up. This points to a price target of 7460.

S&P Daily

What stock should be considered for purchase for Q4? Below is a list of the S&P 100 stock sorted by a unique measure of relative strength. These shares are likely to extend their gains.

Bill Sarubbi Bio
cyclesresearch.com

Bill Sarubbi obtained his BS in 1971 and his MBA in 1972 from NYU, becoming a member of the Foundation for the Study of Cycles in the same year. He trained as a therapist under the direction of Dr. John Pierrakos in New York for nine years. From 1972 to 1990 he worked on the buy and sell sides of Wall Street as an analyst with the Value Line Investment Survey, as an institutional broker, and as a technical strategist with PaineWebber. From 1990 to 2004 Sarubbi was with the Abu Dhabi Investment Authority, where he was a technology fund manager, North American strategist, and member of the currency hedging committee. Since 2004 he has been operating his own money management and consulting service. In the course of his work, he developed unique market analysis software. Sarubbi is a Forbes contributor and is active in groups that focus on the future and on cycles, including the Kenos Circle, a Vienna-based group of futurists. Sarubbi is based in Vienna.

 

NOTE: Prepared by FSC Board Member Bill Sarubbi. The views expressed are his own and not investment advice. This article is intended exclusively to provide information and education to help individuals better understand cycles and the markets. However, this information is not to be construed as professional advice as to the buying and selling of securities or other investment instruments. In no event does the host express any opinion with respect to, or make recommendations regarding, the purchase or sale of any particular security or other investment instrument. There is a very high degree of risk involved in trading securities, and buying or selling decisions are solely within the personal discretion of each individual.

By Bill Sarubbi, FSC Board Member

cyclesresearch.com

The S&P and NASDAQ indices, both weighted and unweighted, have broken out of consolidations. The cycles for both indices point up, so higher quotes are likely. The prior resistance is now support, and price is sitting just above these support areas. This establishes an attractive reward/risk ratio in each market. Newsletter writers have gone from bullish to very bearish quickly. And now the AAII survey has more bears than any time in the last year.

In the summer of 2024, I noted that the stock market was likely to move higher. However, the big tech leaders were seen to be too extended and due for a correction. If the market was to move higher and the tech leaders were to correct, then other stocks would have to start outperforming, which has been the case. Let us analyze the prospects for these stocks through the use of cycles.

The relative strength of the equally weighted NASDAQ versus the S&P 500 turned up in late December and remains strong. This indicates that the average stock in the NDX 100 is stronger than the cap-weighted S&P 500. The big-cap tech stocks have been lagging while the smaller weights in the index have been rising. The result: Many more stocks are rising, but the equities that have the greatest influence on the indices have lagged. This is in sharp contrast to the situation in 2024 in which only 25% of the stocks outperformed the S&P 500.

The relative strength screen shows that within the NASDAQ 100, the big 8 tech stocks are ranked from number 6 (Netflix) to number 75 (Microsoft). Here are the stocks in relative strength order with the cycles' recommendations in parentheses:

• Netflix (hold)
• Meta Platforms (sell)
• Tesla (buy)
• NVIDIA (sell)
• Amazon (sell)
• Apple (hold)
• Google (sell)
• Microsoft (cycle low in March)

This monthly cycle explains the buy signal on Tesla:

Tesla Monthly Cycle

Here is another picture that explains the sell opinion on NVIDIA:

NVIDIA Monthly Cycle

The top 5 NASDAQ current relative performers are:

1. Palantir
2. Super Micro Computer
3. Axon
4. Atlassian
5. DoorDash

From these new leaders, here are the stocks that can be added to portfolios now.

Super Micro came down hard, bottomed, and is now giving longer-term buy signals, supported by rising cycles.

Super Micro Daily, Weekly, and Monthly

Atlassian features technical strength and a rising monthly cycle.

Atlassian Monthly Cycle

 

Bill Sarubbi Bio
cyclesresearch.com

Bill Sarubbi obtained his BS in 1971 and his MBA in 1972 from NYU, becoming a member of the Foundation for the Study of Cycles in the same year. He trained as a therapist under the direction of Dr. John Pierrakos in New York for nine years. From 1972 to 1990 he worked on the buy and sell sides of Wall Street as an analyst with the Value Line Investment Survey, as an institutional broker, and as a technical strategist with PaineWebber. From 1990 to 2004 Sarubbi was with the Abu Dhabi Investment Authority, where he was a technology fund manager, North American strategist, and member of the currency hedging committee. Since 2004 he has been operating his own money management and consulting service. In the course of his work, he developed unique market analysis software. Sarubbi is a Forbes contributor and is active in groups that focus on the future and on cycles, including the Kenos Circle, a Vienna-based group of futurists. Sarubbi is based in Vienna.

 

NOTE: This article is intended exclusively to provide information and education to help individuals better understand cycles and the markets. However, this information is not to be construed as professional advice as to the buying and selling of securities or other investment instruments. In no event does the host express any opinion with respect to, or make recommendations regarding, the purchase or sale of any particular security or other investment instrument. There is a very high degree of risk involved in trading securities, and buying or selling decisions are solely within the personal discretion of each individual.

The Minsky risk call, featured in past reports and media interviews, is now heightened as the S&P 500 reactivates its crash pattern after finally breaking under key support at 4100 (Figure 1). This is further amplified by a broad-based breakdown in major headline U.S. indices such as the Russell-2000 and Nasdaq 100. In terms of behavioral sentiment, the S&P 500 Minsky crash pattern continues to characterize a polarization between buyers and sellers as part of a broadening top, with each higher price high (point 1, 3, & 5) and lower price low (point 2, 4, & 6). Expanding volatility becomes self-feeding. Point 5 is deemed as the “kiss of death” signal. This pattern spans from the prior highs of 2018 and includes the pre-pandemic peak and price exhaustion gap near 3400. It equates to an extended 20% price drop and net peak-trough drawdown of 30% from the all-time highs of 2022.

Currently, there remains a divergence in bearish sentiment versus real positioning with initial spikes in fear indicators, but still no panic, thereby implying further capitulation ahead. A notable example is AAII cash position and allocation into equities, which signals the mood of investors is more bearish than positioning (Figure 2). Global equities remain bearish, marked by the EM top in Q1 2021, the global market breadth and the MSCI World (ex. U.S.) top of June 2021, followed by the major breakdown of growth vs. value in Q1 2022.

Market internals continue to be fragile in the U.S., led by mega cap technology and the ongoing FAANG stocks being de-faanged. The chart breakdown still warns of an extended 40% price drop into pre-post pandemic levels (Figure 3). Watch AAPL, MSFT, and semiconductors for further downside risk.

A key driver has been the prior growth-value rotation during the reflationary cycle of spring 2020. However, in January 2022, the first reversal was triggered on the MSCI World Value chart, which is part of a distributive top phase that is verging on a breakdown under key support (Figure 4). The negative domino effect is also now translating to other sectors, notably steel and miners, with increasing evidence of a top in late cyclical sectors. This would mark an interim top in commodities, marked by energy-oil as the last domino to fall, exasperated by a deflationary bust scenario of the 2022 bull cycle and rising socio-economic concerns.

A key measure of the unwind of selective bubble phenomena and related greed trades will be the completion of a top in Bitcoin as part of the major bear market ahead and potential Darwinian winter period in digital assets over the next few years (Figure 5).

A confluence of market timing headwinds remains, with both seasonality and our composite cycle warning of growing mean-reversion risk into H2 2022 and 2023 (Figure 6). More to follow on seasonality timing patterns in future FSC blog articles.

 

Author: Ron Willian, FSC Development Director

Read Ron William's full bio here.

By Bill Sarubbi, FSC Board Member

May 28-30 is likely a low. The period of May-June, EOM strength will begin on May 31 and run to June 12. This period has been up 64.4% of the time. The expected return is the sixth highest of the 12 months. June is likely to be a positive month. This period of strong seasonality is supported by dynamic cycles. Below, are both the daily and the weekly S&P cycles. The buy signals have been accurate 92% of the time (10 of 12) in the last year. All 6 weekly buy signals have been profitable. The combination of this trio of rhythms will likely propel the S&P to 4250 and higher.

We are thrilled to announce the release of a new upgraded version of the Cycles Scanner, Cycles Scanner: Analyst. Available to Members only, this powerful cycles analysis tool is unrivaled!

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Ray Tomes, FSC Board Member and Science Director, will host the new Saturday Science Summary on Cycles TV. The recorded broadcast will explore recent science news through the lens of cycles analysis.

New episodes will be posted on Saturdays at noon ET.

Tune into Cycles TV: youtube.com/c/FSCtv

Ask questions or suggest topics in the new Members Forum.

Join us on Saturday, May 1 at noon ET, for Cycles Magazine Live.

Board Chair and Executive Director, Dr. Richard Smith will talk about the special Earth Day issue and the reprint of one of the most important papers in the history of the Foundation, The Case for Cycles by Founder Edward R. Dewey.

He will be joined by special guest John Goldstone, coauthor of Welcome to the Turbulent Twenties.

Join us live!

• Date: Saturday, May 1
• Time: Noon ET
• Link: YouTube.com/c/FSCTV/live

Click here to read the special Earth Day issue of Cycles Magazine.